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REUTERS/Toby Melville
Regulators to the rescue.
BREAKUP

How the UK is trying to prevent accounting scandals

It’s not every day that accounting firms are called on the carpet by national lawmakers or that the auditing industry becomes national news. It’s happening in the UK.

“I wonder? How many more company failures and how many egregious cases of accounting do we need?” said Rachel Reeves, a committee chair in the UK’s House of Commons. She was blasting representatives of PricewaterhouseCoopers and Ernst & Young, at an October hearing investigating the sudden collapse of travel company Thomas Cook, which both firms had audited.

As Reeves’ comments suggest, the UK is in the midst of a big push toward revamping its accounting industry. The UK industry faces many of the same problems as its US counterpart, like struggles with audit quality and conflicts of interest that stem from consulting, but a series of high-profile accounting failures at British companies have brought the industry’s woes to the fore.